A report from French management consultancy Opimas highlights something that many in private markets already know: there is huge opportunity for those providing ESG data products to private markets investors.
Spending on ESG products for private markets remains a “small fraction” of the broader spending on ESG, the report notes, sitting at an estimated $45 million globally in 2022. This compares to nearly $1.3 billion of total spending.
However, the private markets segment is growing at a compound annual rate of 45 percent, says Opimas. “Regulatory developments and industry initiatives are the two main driving forces behind growing demand for solutions, though both are still in their infancy.” Opimas predicts sales of $120 million of private markets ESG data services in 2025.
The regulatory forces include global and regional initiatives, such as the Corporate Sustainability Reporting Directive in the EU, and country-specific ones, such as the US’s proposed ESG disclosure rules, France’s Article 29 of the Law on Energy and Climate, or the UK’s TCFD-based laws for occupational pension schemes.
This growth trajectory may not come as a surprise to private markets managers, who are participating in the trend as both customers and, increasingly, investors in the suppliers.
Among the providers listed in Opima’s report are ERM, EcoVadis and Apex Group. ERM has been majority-owned by KKR since 2021. EcoVadis is backed by CVC Capital Partners, General Atlantic’s BeyondNetZero, Singaporean sovereign wealth fund GIC, Astorg and Princeville Capital. Apex is owned by Genstar Capital, TA Associates, Carlyle and Mubadala.
Another notable example is Sphera, an ESG data business that was acquired by Blackstone from Genstar Capital in 2021.